Transnet: 20% rise in revenue

[Steve Appleton]

From Business Day, 26 October 2011, http://www.businessday.co.za/Articles/C ... ?id=157051

Transnet revenue up 20%, boosted by exports
Transnet Freight Rail, the parastatal’s biggest division, accounts for most of the overall revenue of R22,4bn in the six months to the end of September
NICKY SMITH
Published: 2011/10/26 01:01:30 PM

Transnet, the transport and logistics group, has posted a 20,3% rise in revenue to R22,4bn in the six months to the end of September from the previous comparable period, boosted by strong growth in export iron-ore volumes and containers handled at its ports.

Earnings before interest, taxation, depreciation and amortisation rose by 27% to R9,4bn, while operating profit was 25,2% higher at R5,1bn, compared with the same period a year before. Cash generated from operations was up 25,6% to R10bn.

Transnet Freight Rail, the parastatal’s biggest division, accounted for most of the overall revenue, with a 6,3% increase in general freight volumes to 39,1-million tonnes.

"Encouragingly, TFR continues to gain market share in containers on rail with an impressive 23,5% improvement," Transnet said. The government is anxious to move rail-friendly cargo off the country’s roads and on to rail to reduce congestion and carbon emissions associated with surface transport. About 87% of freight in South Africa is transported by road.

Iron-ore volumes rose by 21,5% to 24,9-million tonnes from a year ago, the company said. The increase on the iron-ore line was due to a R400m investment Transnet had made that included acquiring of 75 heavy-haul locomotives and improving the line’s capacity.

Transnet is revitalising its infrastructure after decades of under investment in rail, port and locomotives. Over the next five years, the company will spend R110bn on maintaining and expanding its capacity.

On Wednesday, it also said it had been moving coal to the Richards Bay Coal Terminal in KwaZulu-Natal at a record rate of 1,6-million tonnes a week, with stockpiles at the terminal rising.

"We’ve been transporting on a weekly basis of about 1,6-million tonnes," Brian Molefe, chief executive, said. "What has been exported out of the terminal has been about 1,4-million tonnes. There are stockpiles at (the terminal) of about 5-million tonnes."

Mr Molefe added that the company was exploring options to transport the coal to alternative ports around Richards Bay to make sure more shipments could go out.

Coal producers in South Africa, including Anglo American, BHP Billiton , Exxaro , Optimum Coal and Xstrata, have been eager to export more coal to meet rising demand from India and China but have been limited by infrastructure bottlenecks.

Recent improvements on the coal rail line have been paying off, but the line’s capacity is still far below that of the Richards Bay terminal of 91-million tonnes a year.

Transnet plans to raise capacity on the rail line to 81-million tonnes by 2015. Last year, the logistics group moved 63-million tonnes to the Richards Bay Coal Terminal.

Mr Molefe also said the allocation of coal export capacity to emerging coal miners needed to be increased.

Transnet also said on Wednesday that export iron-ore volumes had increased by 21,5% to 24,9-million tonnes from 20,5-million tonnes previously, due to improvements in operational efficiencies and additional capacity created through its capital investment programme.

Export coal volumes were up 2,6% to 31,3-million tonnes, compared with 30,5-million tonnes before.

Container volumes at the ports were up 9,9%, and bulk volumes increased by 8% to 35,1-million tonnes.

While earnings have gained, the group has had to deal with increases in spending too, as its cost-saving initiatives were not enough to halt a 16% rise in operating costs to R13bn. This was after a 26% jump in material costs, staff expenses (14,4%) and energy costs (26%), the company said.

Transnet is on track to spend a record R25,9bn this financial year after spending R9,5bn in the six months until the end of September.

WITH REUTERS AND I-NET BRIDGE